Amicus Curiae Brief — Kentucky Retirement Systems v. EEOC

4 SY37S5— ()

(8 No. 06-1037

Jn the Supreme Court NOV 3 ~ 2007

of the Hnited States’ OFFICE OF THE CLERK

————___________ —_——— -— - SPECI 17 ay Ss

Kentucky Retirement Systems, Commonwealth of

Kentucky, and Jefferson County Sheriffs Department.

Petitioners,

Vv

Equal Employment Opportunity Commission.

Heepondent.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SIXTH CIRCUIT

ac mt te ee ee ot ee eee me ke

BRIEF FOR THE STATES OF MICHIGAN, ALASKA,

ARKANSAS, COLORADO, DELAWARE, IDAHO,

MARYLAND, MINNESOTA, NEW MEXICO,

OKLAHOMA, SOUTH CAROLINA, TENNESSEE

AND TEXAS AS AMICUS CURIAE SUPPORTING

PETITIONERS

Michael A. Cox

Attorney General

Thomas L. Casey

Solicitor General

Counsel of Record

P. O. Box 30212

Lansing, Michigan 48909

(517) 373-1124

Larry F. Brya

Assistant Attorney General

Attorneys for Amicus Curiae

(Additional Counsel listed on inside cover)

SSPE SESE 7S TS SA EAS

State of Alaska

Talis J. Colberg

Attorney General

P.O. Box 110300

Juneau, AK 99811

State of Arkansas

Dustin McDaniel

Attorney General

323 Center Street, Ste. 200

Little Rock, AR 72201

State of Colorado

John Suthers

Attorney General

1525 Sherman Street,

7 Floor

Denver, CO 80203

State of Delaware

Joseph R. Biden, III

Attorney General

20 N. French Street,

6'* Floor

Wilmington, DE 19801

State of Idaho

Lawrence G. Wasden

Attorney General

P.O. Box 83720

Boise, ID 83720-0010

State of Maryland

Douglas F. Gansler

Attorney General

200 Saint Paul Place

Baltimore, MD 21202

State of Minnesota

Lori Swanson

Attorney General

102 State Capitol

75 Rev. Dr. Martin Luther

King, Jr. Blvd.

St. Paul, MN 55155-1609

State of New Mexico

Gary K. King

Attorney General

PO Drawer 1508

Santa Fe, NM 87504-1508

State of Oklahoma

W.A. Drew Edmondson

Attorney General

313 N.E. 21% Street

Oklahoma City, OK

73105-4894

State of South Carolina

Henry McMaster

Attorney General

P.O. Box 11549

Columbia, SC 29211

State of Tennessee

Robert E. Cooper, Jr.

Attorney General

P.O. Box 20207

Nashville, TN 37202-0207

State of Texas

Greg Abbott

Attorney General

P.O. Box 12548

Austin, TX 78711-2548

QUESTION PRESENTED

The State of Kentucky's public employee retirement

statutes include normal and disability retirement

benefits. Under Kentucky's retirement plan a member is

eligible for normal retirement benefits after 20 years of

service or at age 55 with five years of service. A

disability retirement is designed to replace a normal

retirement if the member becomes disabled and can no

longer work and is not yet eligible for a normal

retirement. However, a member who is eligible for a

normal retirement may not receive a disability

retirement. In calculating Kentucky's disability

retirement benefit, it is assumed that the member would

have worked for 20 years, or to the normal retirement

age of 55, whichever occurs first. Up to 10 years of

imputed service credit can be added to the actual years

of service. The disability retirement benefit is calculated

using actual years of service plus any imputed service

credit so that the amount of the disability retirement is

approximately equal to the amount the employee would

have received upon normal retirement.

The question presented is:

Whether any use of age as a factor in a disability

retirement plan is "arbitrary" and thus renders the plan

facially discriminatory under a disparate treatment

theory of recovery in violation of the Age Discrimination

in Employment Act.

i

TABLE OF CONTENTS

QUESTION PRESENTED.....00000......cccccccccceseeeesseseeeeseees i

TABLE OF AUTHORITIES ....000........ccc cece eeccccesesseeeeees iil

INTEREST OF THE AMICUS CURIAE..............000...... 1

REET NO EN ee eT Bee 2

SUMMARY OF ARGUMENT .....0000000...... ccc cccceeceeeeeeeees 3

Pa aiiicliithaihs inches cite ncetsehetainiteioneiiteiinenadd 4

I. The Kentucky retirement plan does not

violate the Age Discrimination in Employment Act. ... 4

II. The Court of Appeals decision could have

substantial adverse consequences in other States..... 10

IY eccscinarscicnincimniheiinaionsibibiinabuiiaauathasnsiaidenint 12

ill

TABLE OF AUTHORITIES

Cases

Equal Employment Opportunity Commission v

Jefferson County Sheriffs Department,

Kentucky Retirement Systems and the

Commonwealth of Kentucky,

467 F 3d 571 (CAG 2006)... cece eeceeeeeeeees 1, 2,7

General Dynamics Land Systems, Inc. v Cline, et

al,

ESE ae Aa Oe a 4,5

Hazen Paper Company v Biggins,

Be I cetvciciciscosenessintsdveestnscveseveevncsss 5, 6,9

Lyon v Ohio Education Ass'n a Professional Staff

Union,

5S F Sd 196 (G* Cir 1996) .................cccccccscccecccsccseees 8

Seitz v Probate Judges Retirement System,

189 Mich App 445; 474 NW2d 125 (1991) app

den 439 Mich 946; 482 NW2d 459 (1992)

reconsideration den 483 NW2d 898 (1992)........... 11

Smith v City of Jackson,

ATS aE 5,9

Teamsters v United States,

SEE IIR Ie es ee ee 8

Statutes

Age Discrimination in Employment Act (ADEA),

I I scat ectinscitdennaenenesienaniiinssiall passim

STS AOU EMP ETT TOTS 1

ELT AE LALA LLL 1

IG AT A ae SRC IS WSN TE LE 1

lV

Other Authorities

78 Stat 265 § 715; Report of the Secretary of

Labor, The Older American Worker: Age

Discrimination in Employment, (June 1965)

reprinted in U.S. Equal Employment

Opportunity Commission, Legislative History of

the Age Discrimination in Employment Act

(1981) (Wirtz Report) .............cccccccccccesececesssessseeeeeeee 4

Constitutional Provisions

I SU I enti mene 11

INTEREST OF THE AMICUS CURIAE

Under Kentucky's retirement plan a member is

eligible for normal retirement benefits after 20 years of

service or at age 55 with five years of service. A

disability retirement is designed to replace a normal

retirement if the member becomes disabled and can no

longer work and is not yet eligible for a normal

retirement. However, a member who is eligible for a

normal retirement may not receive a disability

retirement. In calculating Kentucky's disability

retirement benefit, it is assumed that the member would

have worked for 20 years or to the normal retirement age

of 55, whichever occurs first. Up to 10 years of imputed

service credit can be added to the actual years of service.

The disability retirement benefit is calculated using

actual years of service plus any imputed service credit so

that the amount of the disability retirement is

approximately equal to the amount the employee would

have received upon normal retirement.

Michigan and the undersigned States are concerned

that the decision of the Court of Appeals,' which found

that Kentucky's plan? was discriminatory, will adversely

impact their ability to apply their existing retirement

statutes that best meet their respective needs and the

needs of their employees. Consequently, they file this

amicus brief asking this Court to reverse the Court of

Appeals.

! Equal Employment Opportunity Commission v Jefferson County

Sheriffs Department, Kentucky Retirement Systems and the

Commonwealth of Kentucky, 467 F 3d 571 (CA6 2006).

? ARS 16.505 et seq.. ARS 61.510 et seq., and ARS 78.510 et seq.

STATEMENT

The Equal Employment Opportunity Commission

(EEOC) brought this action against Kentucky

Retirement Systems, the Jefferson County Sheriff's

Department and the Commonwealth of Kentucky

(Petitioners) alleging that the eligibility requirements

and the manner in which disability benefits are

calculated under Kentucky's statutes violate the Age

Discrimination in Employment Act (ADEA).* The EEOC

asserted that the Kentucky statutes were facially

discriminatory because age was considered a factor in

determining benefits. The Court of Appeals, sitting en

banc, held that Kentucky's retirement plan was facially

discriminatory because it excluded those employees who

were over 55 years of age from receiving a disability

retirement because they were eligible for a normal

retirement. In addition, the Court found that

Kentucky's statutes were facially discriminatory because

employees younger than 55 receive disability retirement

benefits that are less than even younger employees

simply because of their age.» The Court of Appeals

reached these conclusions without determining whether

Kentucky's retirement plan was arbitrary.

3 Age Discrimination in Employment Act (ADEA), 29 USC 621 et

seq.

* Equal Employment Opportunity Commission, 467 F 3d at 579.

5 Equal Employment Opportunity Commission, 467 F 3d at 579-580.

|

SUMMARY OF ARGUMENT

The Court of Appeals erred when it concluded that

Kentucky's statutes violated the ADEA. The ADEA was

enacted by Congress to prohibit employers from

terminating older workers for no reason except their age

and from refusing to hire older workers simply because

of their age. Kentucky's retirement statutes do neither

of these. Instead, they seek to ensure that all public

employees in Kentucky, regardless of their age, are

provided a benefit when they are no longer able to work.

Because Kentucky's retirement statutes use other

reasonable factors besides the age of the employee to

determine the benefit to be given to disabled employees,

the Kentucky statutes do not violate the ADEA.

ARGUMENT

I. The Kentucky retirement plan does not violate

the Age Discrimination in Employment Act.

In 1964, Congress requested the Secretary of Labor

Willard Wirtz to complete a study of the factors that

might tend to result in discrimination in employment

because of age and to recommend legislation to "prevent

arbitrary discrimination in employment because of age."

(Wirtz Report)® The report from Secretary Wirtz noted

that arbitrary discrimination results from certain age

limits.? Moreover, the report observed that "institutional

arrangements... indirectly restrict the employment of

older workers."® In addition, the report defined arbitrary

age discrimination as "assumptions about the effect of

age on [an employee's] ability to do a job when there is in

fact no basis for these assumptions."9

After the report was received, Congress held

extensive hearings.'!° The testimony at the hearings

"dwelled on unjustified assumptions upon the effect of

age on the ability to work."!! The comments of

Representatives and Senators centered on the

6 78 Stat 265 § 715; Report of the Secretary of Labor, The Older

American Worker: Age Discrimination in Employment, 5-6 (June

1965) reprinted in U.S. Equal Employment Opportunity

Commission, Legislative History of the Age Discrimination in

Employment Act 22-23 (1981) (Wirtz Report).

* Wirtz Report, p 2.

* Wirtz Report, p 15.

% Wirtz Report, p 2.

'© General Dynamics Land Systems, Inc. v Cline, et al, 540 US 581,

587-588 (2004).

'! General Dynamics, 549 US at 588.

prevention of discrimination against older workers who

wanted to work.!2

This Court has held that the ADEA was enacted as a

result of the Wirtz Report.'®’ When the ADEA was

enacted, Congress set forth its findings and its purpose

for passing the statute. The findings stressed that older

workers were at a disadvantage in retaining a job and in

regaining employment due to arbitrary age limits that

restricted a person's right to work.'4 As a result,

Congress stated that the purpose of the ADEA was to!5:

promote employment of older persons based on

their ability rather than age; to prohibit

arbitrary age discrimination in employment: to

help employers and workers find ways of

meeting problems arising from the impact of age

on employment. [Emphasis added]

As this Court has stated!®:

Congress’ promulgation of the ADEA was

prompted by its concern that older workers were

being deprived of employment on the basis of

inaccurate and stigmatizing stereotypes.

This Court has also stated that “arbitrary age

discrimination" refers to the Wirtz Report's finding that

employers have age limitations on new hires 1.e., those

over age 45, without consideration of the applicants'

12 General Dynamics, 540 US at 588-589.

13 Smith v City of Jackson, 544 US 228, 232-233 (2005).

'4 General Dynamics, 540 US at 589.

15 29 USC 621(b). (Emphasis added).

16 Hazen Paper Company v Biggins, 507 US 604: 610 (1993).

other qualifications.'’ As a result, this Court has held

that!8:

The ADEA's ban on "arbitrary limits" thus

applies to age cases that exclude older

applicants, necessarily to the advantage of

younger ones."

The Kentucky retirement statutes do not violate the

ADEA because they are neither contrary to the purpose

of the ADEA nor do they arbitrarily discriminate against

a public employee covered by the retirement plan based

upon the employee's ability to do a job. Moreover, the

Kentucky plan is not arbitrary because it does not place

an age limit on when someone can be hired or when

someone must be terminated. Instead, the retirement

plan provides a benefit to employees when they can no

longer perform their jobs, regardless of age. In other

words, any employee who can no longer work receives

either a disability retirement or a normal retirement,

both of which are calculated in the same manner, except

it is assumed that the disabled member would have

continued working until normal retirement age.

The Court of Appeals viewed the EEOC's claim as one

of disparate treatment discrimination. Under a

disparate treatment theory, the employer "simply treats

some people less favorably than others because of" their

age.'9 However, in Hazen Paper v Biggins, this Court

held that “there is no disparate treatment under the

17 General Dynamics, 540 US at 590.

18 General Dynamics, 540 US at 590. See also Smith, 544 US at 255,

O'Connor, Jr., concurring (concluding that the Wirtz Report's

definition of "arbitrary" "clearly equates with disparate treatment"

that is "intentional and unfounded").

19 Hazen Paper Company, 507 US at 609.

ADEA when the factor motivating the employer is some

feature other than the employee's age."2° The employee's

age is not the motivating factor in Kentucky's retirement

plan.

The factor motivating Kentucky in its retirement

plan is to provide a similar level of protection to all

members regardless of age. Indeed, the effect of

Kentucky's retirement plan and its ability to ensure a

benefit to all covered employees is age neutrality.

Kentucky reaches this goal by providing retirement

protection to an employee who either retires after

attaining sufficient service and age benchmarks or who

cannot work due to disability. If the employee already

qualifies for a normal retirement due to age and years of

service, then the goal of providing retirement protection

is achieved and there is no reason to have that person

apply for a disability retirement.

The facts establish that Mr. Lickteig became disabled

when he was 6lyears old after 17 years of service. He

was not given service disability credit of 20 years

because he was already eligible for a normal retirement

benefit after 17 years of service. As noted, the overriding

purpose of Kentucky's retirement plan is to ensure that a

benefit is provided to employees who either become

disabled and can no longer work or who have worked

long enough to become eligible for a benefit under a

normal retirement. Here, that purpose was met since

Mr. Lickteig was eligible for a normal retirement.

The Court of Appeals held that the Kentucky plan

discriminated against Mr. Lickteig because he was not

eligible for a disability retirement since he was over 55

20 Hazen Paper Company, 507 US at 609.

years old.?!' But, Mr. Lickteig was eligible for a normal

retirement, a fact that the Court of Appeals failed to

properly consider. Moreover, someone like Mr. Lickteig,

who was 61 years old when he became disabled, was not

similarly situated to a 40-year-old who becomes disabled,

assuming they each had 17 years of service. The 40-

year-old could have worked more years than Mr.

Lickteig. Thus, a disability benefits system giving a 40-

year-old three more years of service credit to reach 20

was not arbitrary because the benefit entitlement was

related to, but not determined by age.??

The critical factor in Kentucky's statutes is how many

years a person has worked before becoming disabled, not

the age at the time of disability. Indeed, there are

situations under Kentucky's plan when an older disabled

employee would receive more service credit than a

younger employee. For example, if one employee is 40

years old with 10 years of service and the other is 38

years old with 15 years of service, the 40-year-old will be

credited with 10 years of service while the 38-year-old

will be credited with only 5 years of service. Moreover,

the age of the employee may not even be relevant. For

example, every employee with 20 years of service who

becomes disabled receives a normal retirement

allowance regardless of age. Thus, in Kentucky's plan,

age is not the motivating factor and therefore the plan

does not violate the ADEA.

This Court has held in a disparate treatment case

that "proof of discriminatory motive is critical, although

it can in some situations be inferred from the mere fact

21 Equal Employment Opportunity Commission, 467 F 3d at 579.

22 Lyon v Ohio Education Ass'n a Professional Staff Union, 53 F 3d

135, 137, 140-141 (6 Cir 1995).

of differences in treatment."2° But here there is no proof

of discriminatory motive in Kentucky's retirement

statutes. The retirement plan simply provides that a

person who has earned a normal retirement is not

eligible to receive a disability retirement. That

determination is based on years of service, not age. As

this Court held in Hazen, "an employer does not violate

the ADEA just by interfering with an older employee's

pension benefits that would have vested by virtue of the

employee's years of service."24

This Court's decision in Smith v City of Jackson is

instructive.25 In Smith the city gave a higher percentage

pay raise to police officers with less than 5 years of

service than to other police officers. Most police officers

with more than 5 years of service were older. These

officers sued, claiming that they were discriminated

against because of their age. This Court held that the

ADEA does not prohibit action where the differentiation

in treatment was based on reasonable factors other than

age discrimination.”° The Court found that the difference

in the percentage of pay increase was reasonably related

to the City's "perceived need to raise the salaries of

junior officers to make them competitive with

comparable positions in the market."2’ As a result, this

Court affirmed the dismissal of the plaintiff's complaint.

Likewise, Kentucky's disability retirement statutes

are based on permissible factors. They are intended to

23 Teamsters v United States, 431 US 324, 335, n15 (1977) quoted

with approval in Hazen Paper Company, 507 US at 609.

24 Hazen Paper Company, 507 US at 613.

25 Smith v City of Jackson, 544 US 228 (2005). Smith was a

disparate impact case, but the same analysis applies in the present

disparate treatment context.

26 Smith, 544 US at 238, 241.

27 Smith, 544 US at 242.

10

ensure a benefit to employees who have not worked long

enough to be eligible to receive a normal retirement but

who can no longer work due to injury. They are not

intended to discriminate against older workers. Instead

their purpose is to guarantee that a covered employee

will receive some benefit if the employee cannot work,

regardless of his or her age. Kentucky's plan has no

connection with the kind of discrimination Congress

intended to prohibit in the ADEA—discrimination

against older workers who are seeking a job or who wish

to retain their job. Instead, Kentucky's retirement plan

is an attempt to assist employees who can no longer

perform their job due to a disability. This Court should

reverse the decision of the Court of Appeals.

II. The Court of Appeals decision could have

substantial adverse consequences in other

States.

The Court of Appeals' decision could have substantial

adverse implications for the retirement systems of many

States that have retirement statutes. This is because

the Court of Appeals has held that a retirement statute

that merely uses age as one of the factors to determine

the eligibility and amount of a particular benefit is

subject to challenge on the basis that it is

discriminatory. The Court of Appeals decision sweeps

aside the reasoned decision of the Kentucky Legislature

whose retirement statutes, like the retirement plans

enacted by other States for their respective public

employees, were enacted to meet the particular needs of

their governmental employees and the State.

What the Court of Appeals failed to recognize is that

all retirement benefits are not equal among a//

employees. In Kentucky, as in most States, the more

11

years that a person works and the higher a person's

salary, the larger the person's pension will be. A 60-

year-old could have worked for 30 years at a secretarial

position and not receive as much in retirement as a 55-

year-old department director with only 10 years of

service. This does not mean that the statute

discriminates against the 60-year old employee. It only

means that other factors such as years of service and pay

rate also determine a retirement amount.

In the case of Mr. Lickteig, while he did not receive a

"full" disability retirement benefit of 20 years, he

nonetheless is eligible to receive a normal retirement

benefit due to a combination of his age and his years of

service. Mr. Lickteig has not suffered age discrimination

with respect to his desire to work or his eligibility to

receive a benefit. Rather, the purpose of Kentucky's

statutes, which is to ensure that those who become

disabled receive a benefit, was fulfilled. Neither that

purpose nor Kentucky's method of achieving that

purpose in its retirement plan, violates the ADEA, which

was intended to prevent employers from arbitrarily

terminating older workers or refusing to hire older

workers simply due to their age.

Many States, such as Michigan, have a constitutional

prohibition against the impairment or diminution of

governmental pension allowances.2° If the Court of

Appeals decision is not reversed, these States may be

forced to enact major revisions to their retirement

statutes. This might be very difficult to do without

violating the constitutional prohibition, unless the States

28 Const 1963, art 9, § 24: Seitz v Probate Judges Retirement

System, 189 Mich App 445, 449-451; 474 NW2d 125 (1991) app den

439 Mich 946: 482 NW2d 459 (1992) reconsideration den 483 NW2d

898 (1992).

12

increase the benefits of those individuals like Mr.

Lickteig. This increase could cost millions of dollars

nationwide and could further weaken the economic

viability of retirement funds that may already be

underfunded. Congress never intended the ADEA to

have this result.

CONCLUSION

The opinion of the Court of Appeals should be

reversed.

Dated: November, 2007

Respectfully submitted

Michael A. Cox

Attorney General

Thomas L. Casey

Solicitor General

Counsel of Record

P. O. Box 30212

Lansing, Michigan 48909

Telephone: (517) 373-1124

Larry F. Brya

Assistant Attorney General

Attorneys for Amicus Curiae